Cosmax CEO reveals ambitions to enter North Korea market if conditions are ‘favourable’

The boss of South Korean contract manufacturer Cosmax CEO believes North Korea holds great potential for the cosmetics industry, and would be open to building a factory in the country.

North Korean-born Lee Kyung-soo has expressed interest in expanding to North Korea, if conditions for business are favourable.

An untapped resource

Speaking to Reuters, Lee, who was born in North Korea in 1946 before fleeing to the South during the Korean War, said he wished to tap into North Korea’s resources, including its low-paid, but skilled workforce.

South Korea recently passed a law to cap weekly working hours from 68 to 52 hours.

The mandatory shorter hours threatens to increase Cosmax’s labour costs as the company may need to employ more workers to cope with the change.

Last year, Cosmax revenue increased 18%, the company’s slowest growth yet in a decade after diplomatic tension between Seoul and Beijing reduced Chinese demand for South Korean cosmetics.

Despite this, Lee revealed that he had already rejected buyout offers from two large local conglomerates this past year.

The 72-year-old would not name the suitors, but added that cosmetics giant and Cosmax’s customer Amorepacific was not one of them.

Lee added that he had no interest in selling as he expected revenue to continue growing as demand for South Korean cosmetics continued to rise.

“I can easily sell the company if I want to​,” Lee said, “Because cosmetics brands often undergo sales fluctuations, some buyers think it’s safer to invest in manufacturers.”​

Domestic potential

Lee also spoke of entering North Korea’s domestic cosmetics market, provided South Korea and the United States guarantee business activity in the isolated state.

Currently, North Korea produces its own domestic beauty brands such as Unhasu and Spring Fragrance.

North Korean Leader Kim Jong-un has shown particular interest in the cosmetics industry. In July, Kim and his wife, Ri Sol Ju, toured a cosmetics factory in the special economic zone of Sinuiju, where they reportedly produce Spring Fragrance.

According to the state media, Kim has pushed for improving the quality of domestically made cosmetics, as he hopes they can compete with brands like Chanel and Dior on a global stage.

Cosmax is one of the largest original design manufacturers in South Korea that designs and develops products for cosmetic and skin care brands. They boast an enviable client portfolio which includes local brands like Nature’s Republic, and global stalwarts such as L’Oreal.